Infosys and TCS Q1 earnings show stark contrast

Companies have eight per cent difference in year on year Q1 growth

Indian IT services rivals Infosys and Tata Consultancy Services (TCS) have released highly contrasting Q1 results.

Infosys missed its Q1 revenue estimate by a wide margin and cut its full year US dollar revenue growth forecast from nine per cent to five per cent, after seeing its revenue grow less than five per cent year on year to $1.75bn (£1.13bn).

Meanwhile, sector leader TCS saw its Q1 revenue (to 30 June) grow by 13 per cent year on year to $2.73bn (£1.76bn).

Infosys' revenue growth was one per cent lower than the prior quarter while TCS had sequential growth of three per cent. Operating margins for Infosys (27.9 per cent) and TCS (27.5 per cent) were similar.

According to analyst firm TechMarketView, Infosys' five per cent growth forecast is less than half of industry association Nasscom's 11-14 per cent predictions for Indian offshore services growth.

TechMarketView was also surprised that Infosys failed to give a forecast for the following quarter's revenues and earnings, although TCS has never given an earnings and revenue forecast itself.

Headquartered in Bangalore, India, Infosys provides business consulting, technology, engineering and outsourcing services to businesses. In addition to India and the UK, it also has a presence in the US, Canada, China, Japan, Germany and other countries.

Founded in 1968, TCS is a subsidiary of the Tata Group and is headquartered in Mumbai, India. It also provides IT services, business solutions and outsourcing services in a range of countries including South Africa, Brazil, France and the US.